The city needs a more permanent solution to the tax shift caused by depressed property values downtown, Mayor Naheed Nenshi said at a city budget meeting Thursday.

Over the past two years, the city has spent nearly $100 million to head off massive tax increases to suburban businesses caused by the decline in tax assessments from the city’s downtown office towers.

Council had hoped the one-time payments would end as the economy recovered, but with the downtown vacancy rate continuing to hover around 25 per cent, the city says a more permanent solution is required.

“The hope was that it would be better. It’s not better,” Nenshi said Thursday. “We really have to think about how we can do a more systemic solution here.”

Nenshi made the comments during a special council meeting Thursday to discuss the next four-year budget.

The mayor said there are a number of options on the table for tackling the continued tax assessment gap that will be presented at the next meeting of council’s priorities and finance committee on Oct. 30.

“Should we shift some of the tax burden from businesses to homeowners? Should we phase in tax increases for the businesses while we’re still filling the downtown? These are all questions that are hard but that we have to have.”

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The Calgary Chamber of Commerce has previously urged the city to close the gap between non-residential and residential property taxes.

Calgary businesses currently pay a rate that is approximately three and a half times higher than homeowners — the highest business-to-residential property tax ratio in Alberta and one of the highest in Canada.

Coun. Evan Woolley said adjusting that ratio is just one way to tackle the problem caused by downtown vacancies. He said the city needs a strategy for refilling downtown office space and for attracting more residential highrise towers to the core.

He also questioned whether the steps the city has taken to date have chiefly benefited large commercial property owners, rather than small businesses.

“Whether you’re a franchise owner of a Tim Hortons in the suburbs or you own a restaurant in the Beltline — this hits you hard,” said Woolley. “And when you compound that with minimum-wage increases and a number of other tax stressors on businesses, we’ve hit a tough spot.

“This is serious. This affects people’s lives and jobs and their opportunity to pursue a good quality of life.”

Thursday’s property tax discussion came after council met for more than five hours behind closed doors to discuss budget-related issues.

Despite a recommendation from the city solicitor that details from the preliminary report on property taxes remain confidential, council ultimately voted to release the report at the next meeting of the priorities and finance committee.

Coun. Peter Demong was one of seven councillors to challenge the city’s direction to keep the report confidential.

“I didn’t see any particular reason why this should’ve been kept in-camera and I won’t be voting to keep it in-camera,” Demong said.

The city is looking to spend at least $4.8 billion on capital projects between 2019 and 2022, according to revised numbers presented Thursday.

Only about $2.3 billion is considered a new budget request. The remainder is for previously approved, continuing projects such as upgrades to Crowchild Trail and the Bonnybrook wastewater station.

About $447 million has been set aside for the construction of more than a dozen new suburban communities.

City administration warned Thursday that the overall capital budget figure will creep higher as municipal costs associated with the Green Line transit project are added.

The final figures are expected to come when the budget is released Nov. 14.

A wild card heading into the November budget debates will be whether council commits to one or more new megaprojects.

“There are a number of other projects that we’ve been talking about, ranging from the Olympics to an events centre, to a convention centre expansion at the BMO Centre — none of which are currently funded,” Nenshi said during an afternoon break.

“So it’s important for council to see if you want to add these things on to that ($4.8 billion) that’s already being spent, what are the various permutations of what that might look like.”

Nenshi said while funding discussions are ongoing, it’s likely still too early for the city say which ones will go forward.

“There are way too many pieces in play. Today is just for council to see some numbers,” he said. “We’re way too early to be able to find any sources of funding on any of those particular things.”

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